Finding the right solution for your savings needs
Finding the right person for a given job is a specialist and important task. Recruit the wrong individual and a business can suffer and become inefficient and even lose money. In contrast, recruit the right person and they quickly prove themselves to be an invaluable asset, strengthening its position and improving all aspects of the business, including those all-important profit margins.
While recruiting the perfect employee is aimed at generating more income for a company, taking time to make sure that you find the right savings product for your situation is about preserving your own income, and ensuring that your money works hard for you. It is an equally important decision and one that needs careful consideration.
Like trying to find the right person for the job, there is a broad choice available. The vast number of different savings accounts available can make selecting the right one for your situation somewhat daunting initially, but the advice contained within this article can help make that choice a little easier.
- Children's savings account
If you are looking to start a child's savings account then there are several to consider. What the best one is for your situation depends on how much you want to save each month, the age of the child and how much access you, or the child, will need to these savings. If the amount saved grows into a considerable lump sum, it may be more prudent to move this money into a different savings account at some point, so it can accrue a better rate of interest.
Tip: Look for the accounts that offer a combination of excellent savings accounts rates as well as penalty-free access to your funds initially.
- 2. Individual savings accounts (ISAs)
There are many different types of tax-free ISAs available on the market today but the best ISAs are the ones that offer a higher rate of interest on your savings, combined with penalty-free access to your account. There are two major types of ISA; a cash ISA into which you can save £5,340 a year tax-free, and a stocks and shares ISA, which allows you to save up to £10,680 a year tax-free.
Cash ISAs come in two different types. A variable rate ISA tracks the base rate and offers a rate of interest slightly above the rate set by the Bank of England, whereas a fixed rate ISA offers a fixed rate of interest for a stated period. Fixed rate ISAs may also come with an introductory offer which sees them offer an increased rate for a stated duration (usually 12 months).
Tip: If you are going to invest more than £5,340 a year, remember you can opt to invest it all in a stocks and share ISA, or you can split your money between a stocks and shares ISA and a cash ISA and limit your risk.
- Fixed rate bonds
If you are in the position of having a single large lump sum of money to invest as savings and want a good return on your investment, then a fixed rate bond may well be the product to consider. These bonds offer a guaranteed annual return on your investment of a stated percentage, if you meet the criteria for investment. This can include not making any withdrawals from your account during the fixed term period.
If you have a lump sum to invest and can afford to leave the money alone and let it grow in the account, then a fixed rate bond is a good, safe and reliable way to invest your cash.
Tip: If you are investing a large lump sum of cash, it is vital to consider if you will need access to this cash in the future. If you know this is likely, then you need to consider which fixed rate bond product is suitable to you as many come with penalties should you need to access your money during the stated introductory period, which can be from one to five years in some cases.
So much like hiring the right person for the right job, finding the right savings product for your savings need is the best way to ensure a positive, beneficial and financially secure future.
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